Photo credit: Mayur Resources
It was another quarter of significant developments and milestone achievements across Mayur’s portfolio.
A major highlight was the granting of the Mining Lease for the Orokolo Bay iron and industrial sands project. As with the ML for the CCL project this was achieved in record time despite the impacts of COVID. This was followed by the signing of a magnetite offtake agreement with a large Japanese trading house and a cornerstone investment deal entered into with HBS.
HBS are due to commence site works at the Orokolo Bay project in February 2022. The site works will support the IPO of Mayur’s iron and industrial minerals portfolio via the spin out of Ortus Resources to raise the remaining funds required to complete construction and bring Orokolo Bay into production.
Mayur Renewables strategy was significantly advanced with the securing of 800,000 hectares of forestry permits for the preservation of highly biodiverse rainforest for carbon offset projects. The $3 million financing facility with Tribeca Capital Partners will be used to further develop these project areas into carbon estates under an internationally recognised verification standards as Verified Carbon Units (VCU). Mayur renewables also completed a 500 MW solar power study for the SEZ and CCL project.
A total of $0.99 million was spent on exploration and development activities in the quarter, predominantly relating to the Central Cement and Lime Project, and the Orokolo Bay Iron and Industrial Sands Project. An outline of these activities is included elsewhere in this report.
During the quarter, the company made payments totalling approximately $0.15 million to related parties representing remuneration paid to Directors.
Looking forward Mayur’s activities will be focussed on the following areas:
- Community endorsed enabling works and village development projects for the Central Cement and Lime (CCL) Project
- Enabling works for the Orokolo Bay Project, in conjunction with the mine construction works to be undertaken by HBS following the recent grant of the Mining Lease
- Masterplan Development work for the Mayur-Provincial Government-Landowner Special Economic Zone (SEZ), to build upon the recently completed study that has identified 500MW of potential solar power capacity within the SEZ; and
- Planning and scoping studies for the portfolio of renewables projects being developed by Mayur Renewables, that includes solar, geothermal, and forestry carbon estates
Projects
Central Cement & Lime Project
The proposed Central Cement and Lime (CCL) Project is a vertically integrated manufacturing facility with the ability to meet 100% of PNG’s cement, clinker and quicklime requirements, displacing imports into PNG, and to penetrate nearby export markets in Australia and the South Pacific. The co-located quarry, plant site and deep draft wharf will enable very low operating costs. CCL is also seeking to become Asia Pacific's first carbon-neutral Cement and Lime producer.
Offtake support and financing
Offtake support has continued for Phase 1 and 2 of the fully approved CCL project. Further backing received from Independent Cement consumers in Australasia with letters of support now totalling 1,167,000 tonnes per annum for Clinker and Cement, including blue chip end users and traders of quicklime and hydrated lime products. The process to secure strategic JV equity partner(s) to assist with co-development for Phase 1 is continuing.
Road and bridge upgrade works
Works continued and were largely finalised on the alignment and locations for the road and bridge upgrades while geotechnical surveys were commenced on the access road and bridge alignment to connect the project to Port Moresby.
SEZ and Large-scale Solar potential
Following completion of the study by VECKTA demonstrating potential for large scale solar (>500 MW) within the SEZ that also hosts the CCL project. Refinement of CCLs phase 1 hybrid power station was also completed and will focus on an initial 10 Mw of solar integrated with Battery Energy storage and reciprocating engines.
Community projects - microgrid rooftop solar for school
Aa a demonstration of Mayur’s commitment to the local community a microgrid rooftop solar system is to be provided to the Kido Community School with installation expected during February 2022. This will provide much needed power for classroom fans, computers and other appliances that are taken for granted in schools in developed nations such as Australia.
Orokolo Bay Iron & Industrial Sands Project
The Orokolo Bay Industrial Sands Project in PNG will produce a number of products including titano-magnetite, construction sands and a zircon-rich valuable heavy mineral concentrate. Orokolo Bay Project has been significantly de - risked with the Mining Lease granted and strategic delivery partner secured.
20-year Mining Lease granted
Despite the challenges of the Covid pandemic the Mineral Resources Authority (MRA) was still able to undertake and conclude a detailed assessment of the Orokolo Bay Mining Lease application submitted in December 2020 and in December 2021 the MRA granted a 20-year Mining Lease to Mayur Iron PNG Ltd.
The grant is the final statutory approval required to allow full-scale production of a multi-product operation, that is planned to produce 0.5 million tonnes per annum (Mtpa) of magnetite, 1 Mtpa of high-grade construction sand, and up to 10,000 tpa of zircon concentrate with its target markets being Japan, Australia, China and Singapore.
Magnetite Offtake with Japanese trader
A Term Sheet agreement was signed with a leading Japanese Trading House, for the supply of magnetite on behalf of Asian Steel mills. The non-binding Term Sheet contemplates the parties agreeing to negotiate and finalise commercial sales and purchase contracts, following the satisfaction of various buyer and seller conditions, including test results and the sale of a trial shipment, following the project’s planned commissioning in 2022.
Strategic investment by HBS – PNGs leading construction and mining contactor
Following the ML grant and the magnetite offtake agreement a binding Terms Sheet Agreement was executed with leading PNG based construction and mining contactor HBS (PNG) Limited for the delivery of the Orokolo Bay Iron and Industrial Sands Project.
The key terms with HBS are :
- HBS to invest in Mayur Iron PNG Ltd via the provision of construction works, plant and equipment for the Orokolo Bay Project
- HBS investment represents approximately 27% of the total capital expenditure required to bring Orokolo Bay into full scale production
- In recognition of HBS’s early investment in the Project and commitment as a strategic partner, HBS is to be provided with a discounted 20% equity holding in Ortus Resources Limited, the Orokolo Bay Project holding company
- Capital raised from the planned Ortus IPO to be used to fund the remaining construction of Orokolo Bay
- HBS due to commence construction works at Orokolo Bay in February 2022 prior to the Ortus IPO
- Remainder of construction works and Contract Mining by HBS to occur post completion of the Ortus IPO
- First shipment of products planned for late 2022 / early 2023
Spin Out of Ortus Resources
The Orokolo Bay project is now well positioned as the flagship asset for “Ortus Resources” the entity holding Mayur’s iron and industrial sands portfolio, to be listed on the ASX in 2022.
The project economics for Orokolo Bay remain robust given the definitive feasibility study NPV forecast of US$131 million (post-tax (real) , 10% discount rate*) was based on an average life of mine iron ore price of US$66 per tonne (62%Fe).
The HBS funded construction work is planned to commence in February 2022 and includes the provision of people, plant and equipment to complete an agreed early works package. These construction works will occur prior to the planned IPO of Ortus. In the event Mayur does not progress with the development of the Project, or does not complete the IPO, Mayur will cover the costs of this work.
Mayur Renewables
Mayur Renewables has been established to:
- directly assist Mayur’s nation building projects in PNG by providing a pathway to net zero through the establishment of renewable energy and carbon offsets projects for its lime and cement project;
- align and enhance broader ESG commitments and respond to the needs of future downstream building materials customers; and
- additionally provide projects of sufficient scale to establish standalone carbon and renewables-based opportunities directly addressing the race to decarbonize and achieve net-zero targets by both governments and private industry
Solar & Battery Storage
Study completed by VECKTA confirmed >500MW of renewable solar potential within Mayur’s granted Special Economic Zone (SEZ) that covers an area of 52 km2. located next to the PNG LNG plant site.
Targeting provision of renewable solar power for:
- Mayur’s CCL Project (CCL) located within the Special Economic Zone (SEZ);
- other potential new industry that could be established within the SEZ; and
- existing industry adjacent to the SEZ i.e. LNG and other hydrocarbon industries
Mayur has also signed an MoU with Australian-UK energy storage innovator Gelion Technologies for supply of zincbromide non-flow battery technology to PNG. The MoU is for the provision (subject to demand) of an initial 100- megawatt hours of energy storage for projects from 2022 to 2027 Mayur to be Gelion's sole distributor in PNG.
Geothermal
Mayur is establishing an early-stage portfolio of exploration tenure identified with large geothermal resource potential.
High quality nature-based REDD+ carbon offsets - protecting and preserving Papua New Guinea’s rainforest for the benefit of forest communities
Following almost 9 months of discussions and negotiations with the PNG Forest Authority (PNGFA), CCDA , and with support from Provincial Governments and landowner groups, Mayur Renewables was granted 3 Forest concessions to be protected and repurposed as carbon estates for the reduction of carbon emissions and creation of nature-based carbon credits. These projects covering 800,000 hectares aim to provide an economically beneficial alternative for PNG landowners and forest communities that means it better to preserve the forests in their living state rather than destroy them via logging or clearing.
Prior to the granting of the 3 forest concessions Mayur and the PFA executed a Heads of Agreement (HOA) over 7 areas of forests (totalling 1.4 million hectares) that were under existing Forest Management Agreements (i.e., forest areas that were slated to be logged).
The reclassification of these areas from logging into carbon concessions enables the establishment of a carbon credit estate that will protect and preserve PNG’s unique biodiversity. The Landowners and the PNG Government (particularly Forestry, CCDA and Provincial Government) are due to benefit from the vast majority of net revenues from any future carbon credit trading, this will include the planning and implementation of various community and social projects.
Mayur has also appointed PNG’s leading carbon credit expert, Professor Chalapan Kaluwin, to Mayur Renewables Advisory Board who will provide key inputs into the process of establishing Mayur’s carbon credit portfolio and stakeholder management within PNG.
The carbon estates are to be verified under the United Nation’s Reducing Emissions for Deforestation and Forest Degradation (REDD+) initiative under internationally recognised systems and allow carbon credit trading such as VERRA*. This process to assure independent compliance in the projects set up and ongoing management throughout the life of the carbon credit.
The carbon credits from the forest concessions will provide PNG and nation building projects such as Mayur ‘s CCL project a development pathway to industrialise while being able to attach a carbon offset to its products. Given the scale of the projects Mayur expects significant surplus credits to also be available for trading in the rapidly growing international carbon markets
With unprecedented commitments to decarbonise and achieve net zero targets from governments and private industry across the world, the role of carbon credits in pursuit of these goals will be critical. Whilst the market for voluntary carbon credits is developing, they currently trade at a discount to the compliance markets, however this pricing is expected to converge as demand increases. There is also growing recognition from the market in the quality of REDD+ projects, similar to what Mayur is pursuing with its forest communities, that seek to deliver social benefits over and above the obvious environmental benefits of protecting the world’s most pristine rainforests.
For more information refer to MRL’s ASX announcement from 12 January 2022 ‘Carbon Concessions Paving Pathway To Net Zero Projects’ and Mayur Renewables Webinar Presentation on carbon offsets released on 20 January 2022.
Article courtesy of Mayur Resources
